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2020 milk price takes a hit in latest USDA outlook report

Progressive Dairy Editor Dave Natzke Published on 10 March 2020

The USDA’s March World Ag Supply and Demand Estimates (WASDE) report lifted the 2020 milk production estimate, citing larger expected cow numbers. In combination with trade estimate adjustments, the increase in milk supply is projected to pressure prices lower for milk and most dairy products.

The 2020 milk production forecast at 222.3 billion pounds would be up nearly 1.8% from 2019. Some of that increase could be attributed to the extra leap day in 2020. (The USDA also revised the 2019 milk production estimate up slightly from last month to 218.3 billion pounds. That was up about 0.4% from 2018.)

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Projected 2020 prices for cheese, butter and nonfat dry milk were reduced compared to a month ago, with only the dry whey price forecast inching higher. Based on these estimates, the 2020 average cheese price would now be slightly below the 2019 average, with the average butter price substantially weaker (-40 cents per pound) than the year before. The 2020 average price for nonfat dry milk will climb about 13 cents, but the 2020 dry whey price will also decline, down about 2.5 cents.

As a result, the USDA’s latest projections for 2020 milk prices are now below 2019 averages.

  • The Class III milk price forecast is now $16.65 per hundredweight (cwt), down 30 cents from last month and 31 cents less than the 2019 average of $16.96 per cwt.

  • The Class IV price is $15.75 per cwt, down 95 cents from last month and 55 cents less than 2019.

  • The 2020 all-milk price is now projected at $18.25 per cwt, 60 cents less than last month’s forecast and 35 cents below the 2019 average in 2019.

Beef outlook

The beef production forecast was raised from the previous month as higher expected steer and heifer slaughter more than offsets lower non-fed cattle slaughter. Heavier carcass weights are also expected to support increased beef production. The export forecast is reduced on weaker anticipated demand in several markets.

The 2020 average fed cattle price was projected at $114.50 per cwt, down $2.50 from last month’s forecast and about $2.25 per cwt less than the 2019 average of $116.78 per cwt. Highest prices are expected in the first quarter of the year.

Feed outlook

Impacting the cost side of the dairy income ledger:

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  • Corn: This month’s 2019-20 U.S. corn supply and use outlook is unchanged relative to last month. The projected 2019-20 season-average corn price received by producers remains at $3.80 per bushel, down a nickel from last month’s forecast and up 19 cents from the 2018-19 average price.

  • Soybeans: This month’s U.S. soybean supply and use projections for 2019-20 are also mostly unchanged. The U.S. season-average soybean price received by producers for 2019-20 was projected at $8.70 per bushel, down 5 cents from the previous month’s forecast. The soybean meal price forecast was unchanged at $305 per ton.  end mark
Dave Natzke
  • Dave Natzke

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  • Progressive Dairy
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